The SEC has recently laid charges on yet another fraudulent company, which robbed investors of funds through a variety of means.
The charges laid are against a group of entities, which include:
- Teshua Business Group
- Larry Leonard
- Shuwana Leonard
It is believed that the couple, Larry and wife Shuwana, used his standing as a former Texas Pastor, to prey specifically on the African-American community.
Over the past few years, and most prominently during the 2017 ICO boom, we have seen various projects touting their unique nature. While everything from maple syrup, to lost treasure, has been touted as value backing for coins, one of the more ridiculous is Alkaline Water.
It is this Alkaline Water, which much of the fraud to have taken place, was based upon. The Leonards’ touted their Alkaline Water company as being the first of its kind to be ‘black owned’. They then attempted to raise money by selling stock, selling non-existent ‘TeshuaCoins’ purportedly backed by their reserve of water, and under the guise of a yet-to-be established BTC mining outfit.
Even if this entire endeavour was legitimate in their efforts to raise money, the underlying product is basically snake oil; A product with no proven benefits was being peddled as an asset of value.
Over the course of their journey, preying on unsuspecting investors, money was stolen through various means.
There were three main streams of income for the couple behind TeshuaCoin.
- Capital generation through an ICO
- $170,395.20 was raised out of a $20 million goal
- Selling fake equity within Teshuater
- Nearly $291,044.07 was raised through the issuance of fraudulent ‘stock certificates’
- Investments for establishing a mining pool
- $25,544.96 was stolen, with zero effort to establish said pool
Naturally, as the fraud committed was not done so in a singular manner, there are various charges being laid against the couple and their group of companies.
These charges revolve around each of the aforementioned three ways that they decided to defraud investors. Per their filing, SEC is seeking the following:
- Permanent injunctive relief
- Disgorgement of ill-gotten gains plus prejudgement interest thereon
- Civil penalties
- Equitable and ancillary relief to which the Court determines the Commission is entitled
In their filing, the SEC summarizes the result of efforts made by Larry Leonard, Shuwana Leonard, and their companies, to defraud investors.
“Since at least 2017, Larry Leonard, individually and through Teshuater and TBG, along with his wife, Shuwana Leonard, targeted investors in the African-American community by promising oversized returns on various investments related to Teshuater, a business that bottled and distributed alkaline water. During the course of this scheme, Defendants raised nearly $500,000 from over 500 investors through materially false and misleading statements and omissions and other deceptive conduct.”
Telegram’s TON Blockchain Officially Halted
This week, the messaging giant Telegram conceded its year-long battle against SEC regulators over the TON blockchain. According to reports, the company officially filed a stipulation withdrawing their appeal days ago. The news symbolizes the death of one of the most highly anticipated projects in the crypto space. Additionally, it represents continued pressure from regulators towards large social media-backed crypto projects.
The heartbreaking news came via a company blog post. In the notification, Telegram’s CEO Pavel Durov makes his first public statement regarding the ongoing SEC trial. He explained the firm’s choice to abandon the hard-fought project. Durov tells TON investors that the choice centered on the SEC judgment blocking the issuance of Gram tokens. It left the company unable to fulfill its responsibility to investors.
TON Blockchain – Play the Long Game
However, the abandonment may not be forever. The filing is simply an agreement by the SEC and Telegram to stop the court proceedings without judgment. It could be that Telegram seeks to play the long game now and let other companies fit the regulatory bill to set precedents in the market.
Telegram’s woes originated from its record-breaking 2018 ICO. The company was able to secure $1.7 Billion in the crowdfunding event. Notably, this is the largest ICO to ever launch. As such, it wasn’t a huge surprise to learn that regulators wanted more control over the project given the market response. Importantly, the funding was to go towards the constructions of the TON blockchain ecosystem.
Shortly into the venture, regulators took aim at the project. In October of 2019, the issuance of GRAM tokens was frozen after an SEC judgment halted any actions. Notably, Telegram appealed the decision but the appeal was dismissed by Judge Kevin Castel of the Southern District Court of New York.
TON Blockchain – Investor Options
Following the injunction, Telegram provided investors with two options. Investors that wanted a refund could receive 72% of their initial investment back. In the past, Gram investors were hesitant to take the refund options because the upside potential of the project was great. However, as the SEC trial began to degrade their hopes, more investors caved to the pressure.
The second option was a bit more unique. Telegram offered to allow investors to convert their funds into a loan to the company. For their flexibility and patience, investors would receive 110% repayment. Telegram never mentioned publicly how many investors went this route.
Hard Forked TON Blockchain
Surprisingly, there is still some hope for the TON concept to live on. This month a group of advantageous developers released a hard fork of the project. The new blockchain goes by the name of Free TON and has the support of TON Labs. Importantly, TON Labs worked directly on the original TON ecosystem.
A TON of Bad News
It’s sad to see Telegram forced to drop the TON concept for the time being. However, it will be interesting to see what route the firm takes now. Given the new hard fork, it appears that the market already has a TON community ready to brave the storm. For now, the news doesn’t bode well for other major tech firms involved in SEC litigations.
Kin Releases its Transparency Report
In response to SEC pressure, KiK’s Kin Foundation released a transparency report this week. The data includes Kin’s structure, processes, and budget. Kin has been enthralled in a legal battle with the SEC for months for their 2017 $100 million ICO. Importantly, the report provides regulators and the public new insight into the firm’s inner-workings. Company executives believe the information clarifies the true token taxonomy of Kin.
The news showcases continued SEC pressure on the ICO community. Regulators continue to pump the breaks on large tech companies’ crypto projects. This year has seen the SEC halt Facebook’s Libra, Telegram’s TON, and a host of other high-profile projects. Additionally, the maneuver highlights KiK’s determination to fulfill their blockchain aspirations in the face of intense regulatory push-back.
According to the report, the Kin Foundation is an informal community of 10 members and a representative, The member’s tasks include reviewing kin rewards and disagreements in the community. Interestingly, the report reveals that Kin representatives are to act as communication points between developers and token holders. Notably, Kin only has one representative, Matt Hannam, at the moment. However, the report explains that plans are underway to add more representatives in the coming weeks.
The foundation lists Ted Livingston, the CEO of Kik Interactive and William Mougayar, author of “The Business Blockchain” as it’s directors. Importantly, Kin members decide on their board yearly. This decision happens prior to budget drafting. Here, executives configure spending for every aspect of the business including developers, node incentives, marketing, and operational costs.
Surprisingly, the report revealed some previously unknown information regarding Kin’s usage and adoption. To date, Kin already registers over 28 million users. This community averages around 300 million kin in daily transaction volume. This information demonstrates an impressive rate of adoption for the token.
With their transparency report in hand, Kin prepares to make their case yet again. Importantly, executives pointed to the recent miss-handling of the Telegram case as evidence that changes must take place. Specifically, Kin believes regulators need to avoid correlating Grams to Kin.
SEC Seeks Early Judgement
In March, regulators believed they had Kin on the ropes. The SEC requested an early summary judgment against the firm. The judgment was to seek a permanent injunction against the project. Additionally, regulators wanted a variety of fines and penalties placed against the firm.
The Kin Foundation is the non-profit organization for the hugely popular messaging app Kik. Kin entered the sector officially in 2017 with the goal to promote and help build the Kin ecosystem. Since its inception, Kin has made major headway within the blockchain sector.
Despite having logic on their side, Kin still faces an uphill battle. To date, the SEC has shown no signs of budging on their refusal to approve any crypto projects originated from major social media platforms. Hopefully, regulators will take the time to evaluate each of these cases separately and understand that innovation is at the doorstep. Its time to let him in.
Raiffeisen Bank in Cooperation with FinTech Billon to Pilot Digitized National Currency
The transformation of the payments industry is in full swing. Driven by FinTechs, the payments technology innovation brings new ways of transacting on a global scale, with easier on-boarding, reduced waiting times and lower fees.
It’s no surprise that FinTechs also experiment with blockchain-based platforms that allow for tokenized representation of assets. One such platform is being developed by Billion, a British-Polish FinTech that is currently working with Raiffesen Bank on end-to-end digitized national currency transfers.
Raiffeisen to Pilot Digitized National Currency Project
According to a report, the Austrian banking giant successfully tested Billon’s tokenization platform, dubbed RBI, and moved the project from a proof-of-concept to a pilot project.
Borne out of Raiffeisen Bank International’s (RBI) Elevator Lab acceleration program, the tokenization platform is based on Billon’s distributed ledger technology (DLT) with the goal to enable tokenization of national currency.
Billon was founded in 2015 and is a FinTech company working on integrating national currency transactions, document and identity management tools into a single architecture.
The goal is to bring blockchain capabilities into the regulated world. This is in line with the global trend of commercial and central banks building blockchain-based infrastructure that comply with payment and data regulations.
FinTechs Augmenting Banks
The system from Billon enables banks to complete transactions that have higher settlement speeds, accurate payment status, reduced exception handling and as a result reduce customer inquiries.
Transactions with this system can have additional data or documents attached to them, accelerating the verification and validation process for e.g. the source of funds. Consequently, transfers are quickly settled and cleared while maintaining a clean audit trail and full transparency.
Both Billon and Raiffeisen Bank International plan to pilot the digital currency by the end of this year. The trial is set to include RBI’s corporate and institutional clients. Should the test period be successful, the Austrian bank could start using it in Central and Eastern European (CEE) countries where it has an extensive presence.
Stefan Andjelic, blockchain hub lead at Raiffeisen Bank International, spoke of the necessity of banks having to partner with FinTechs to meet new consumer demands:
“Billon is a great example of a fintech that understands how to adapt blockchain to serve the needs of banks and their clients. Specifically, during the COVID-19 situation, banks need to partner with fintechs to innovate faster and help clients with payments processing and liquidity needs.”
The full extent of the benefits from a tokenized platform are yet to be felt when deployed in a full working environment, but Billon expects the bank to improve customer experience, differentiate its offering and achieve cost efficiencies at several steps during the process.
Blockchain and Banking
There is a noticeable trend amongst commercial and central banks to develop new payment rails and exploring blockchain-based solutions.
Among the first household names in the financial world to entertain the idea of a digital currency was JP Morgan with its own JPM Coin that is marked for settling internal transfers for its corporate clients. Nonetheless, up to this day there is no update from the banking giant about fully deploying the JPM Coin.
At the same time, many central banks across the globe are taking decisive steps to launch their own digital currencies, clear examples being People’s Bank of China with the digital Yuan and the Banque de France testing a digital version of the Euro.
At the highest level, institutions are studying the feasibility of digital currencies and how these can be implemented in the current monetary environment.
VISA is another company whose involvement with digital currencies testifies the looming change in how payments are made. The payments giant has also filed for a patent in the United States to develop a digital fiat currency.
The Trend to Go Digital
The willingness to bring forth a digital version of a currency has also been exacerbated by the current COVID-19 pandemic. Transitioning to an almost fully digital experience could become a prerogative for many companies.
In the wake of the pandemic outburst, the Bank for International Settlements (BIS) published a report on how physical cash could transmit viruses, including the COVID-19. As a result, the BIS advised financial institutions to utilize digital methods of payment transactions, while advocating for central bank digital currencies (CBDC).
With this new blockchain-based initiative with Billon, Raiffeisen Bank is definitely on track to bring better digital payment methods to their offering.
- RBI Clarifies Crypto Banking Regulations in India
- Telegram’s TON Blockchain Officially Halted
- Kin Releases its Transparency Report
- Raiffeisen Bank in Cooperation with FinTech Billon to Pilot Digitized National Currency
- Security Token Group Study Reveals Investors Hedging US Markets with Security Tokens